Advice on 1st opportunity- please help

[MERRR]

Hello.  My name is Matt, I am 22 and about to graduate college.  I plan on making a career out of REI.  I have a great opportunity right now to gain some experience, but I am looking for some advice.

Long story short...my family owns a building restoration company.  About 5 years ago, the company purchased a small building as an investment property.  We have successfully rented out all 4 offices and maintained full occupancy for the most part.

About 2 years ago, the city of Piqua, Ohio approached the company with a deal on another property located in downtown Piqua.  The building was a foreclosure, and needed a little work.  We bought the building, fixed it up, and are now trying to rent it.

The Details- the existing mortgage on the property was for $814,000.  We practically got the property given to us with the condition that we would restore it.  Paid $10,000 for the building.  Put about $140,000 in restoration.  So as of now we have about $150,000 invested in the property.

The Property-  The building is actually a great property.  It is located on Main St. right in the heart of downtown Piqua, Ohio.  It is has 4 floors, each with about 5000 sq. ft.  The first floor has a great store front.

Now that restoration is completed, we are having a lot of trouble getting any interest at all in the property.  Many in the company want to just cut our losses and sell the property.  They are tired of dealing with trying to get it rented.  As a last ditch effort, they have decided to turn the building over to me and see if can do anything with it.  I think it would be a horrible decision to sell right now, but I need to get it rented to prove this.

I know the economy is really affecting things, but this building has too much potential to sell in this market.

I am looking for any ideas on how to market this property and get some interest in renting it.  They have already tried using an agent, but they did not get any results.  I put it on Craigslist trying to utilize some free advertising, but I too have yet to see any results.

Any advice would be great.  Thanks in advance

[tatertot]

I have a suggestion, if you aren't afraid of a little work.

Many small businesses are going under. But many recently unemployed people are hoping to buy a small business and can't find a decent one.

So what you do is decide what would work well in the storefront. Add up the cost of starting it and advertise the business for sale.

For example: Suppose a health food store would work in there. You add up the cost of shelving, coolers, check out lanes, cash registers, etc. Say it comes to $50,000 for all the equipment.

You advertise "own your own health food store for only $50,000 plus the cost of inventory."

The upstairs ones are probably only suited for offices. Maybe someone else has ideas for office space. The only thing I can think of is reducing the rent. Or tie one of the upstairs to the downstairs business. Antique store downstairs, furniture restoration upstairs. Ice cream parlour downstairs, bakery upstairs.

I suspect that holding it and waiting out the recession would be a good idea. You don't have that much tied up in it, and the economy has to turn around sooner or later.

[MERRR]

Thanks tatertot.  That is actually a really good idea.  In fact, I just made a really good networking  contact with a business broker in one of my entrepreneurship classes.  Maybe I will run that idea by him and see what businesses are in demand.  Great idea....anyone else have any.


Thanks

[justin0419]

I grew up in a very small mid-western town with many other small towns in the area.  I've seen some buildings like you describe that are set up with a store, restaurant, or office downstairs and apartments upstairs.  I suspect if you're done w/ the rehab, it's a little late to entertian the idea of apartments upstairs.  Consider a Dr. or Dentist's office or an insurance office for the first floor.  What about a Psychologist or Counselor on one of the upper floors?  You can try to court some local businesses that may not be in the best location.  You hold a great opportunity for small business owners in your area.  If you can somehow divide those monstrous floors, you can make reasonable size spaces and rent them our for about $500 or so per month.  You'll have to keep the rent low enough to encourage people to take a shot at operating a small business.  

[MERRR]

I forgot to mention, the 4th floor has been converted into an apartment.  We had an employee of our restoration company move in there, and he did the remodel as part of his rent.  The problem is during the winters he couldn't afford to heat 5000 sq. ft.  So we have thrown around ideas such as including apartment with the rental of the first floor.  But our problem is even getting anyone to look at the first floor.  And what makes no sense is this is a very nice building.  I don't know if I am allowed to put links in post on this forum.  But if I am I will post the link to my craigslist ad which has pictures of this building.  Someone please let me know if I am allow to do that.

Another idea that we had is for the business that caters to rent the first floor.  Then we could convert either the 2nd or 3rd floor into a banquet hall.  But again, we don't know how to go about getting people to even look at the building.


Thanks a lot guys, keep any more ideas coming

[justin0419]

Well, just understand people are skittish right now about starting new businesses.  The economy doesn't have legs right now.  Financing is hard to get.  Job losses sap what savings people had.  Vacant commercial RE buildings are plentiful. 
You need to emphasize what makes your building different. Yours is newly renovated and can be adapted to suit a variety of businesses.  Yours is on Main St.  Yours is spacious. 
You're asking for suggestions about how to rent this out.  You're not asking people here to buy your building.  I don't see why you couldn't post a couple pictures so maybe you could get some more ideas.

If you're thinking about a banquet hall, what about having that on the first floor?  Easier access for old people when there aren't any stairs involved. 

[tatertot]

One other suggestion. Vacant commercial is sometimes donated month to month to reputable charities.  That doesn't bring any money, but it gets the heat paid and gives a good tax deduction.

A thrift store would need the first floor and you can't afford to do that, but many charities can work on an upper floor. They are glad to get the free rent with the condition that they have to move if you find a paying tenant.

Example: there is a charity here that provides a new outfit of school clothes and school supplies to poor children. They need a lot of storage space. The kids are in for only a week for fittings the week before school starts.

Another idea: you can donate that bottom floor for 1 day events and that will get you lots of free advertising.

An example: a local fundraiser for a food bank has an all you can eat soup night. You pay $15, get a hand made artisan soup bowl (donated by local artisits) and go around and sample different home made soups. The event is on the radio and TV for weeks, and they would mention that the hall by name and that it had been donated by you.

I hear ads for commercial buildings for sale or rent on the radio, but I have no idea how successful or economic that is. A lot of businesses play the radio through their sound system (it's always the same specific one, so pay attentionas you wlk through stores and businesses to what they are playing, and then you know who to advertise with)

Right at this moment, you might be able to get one of those Christmas stores that open for a couple of months and close as soon as Christmas is over.  It's only rent for a couple of months, but it is better than vacant for those same months.

Be sure that you decorate the windows and block off the view of the inside, so the building looks like it is loved and cared for and isn't a derelict.

[Nick Brian]

I love tatertot's idea of utilization but don't you think it's problematic and too much for a short period like christmas? Thanks for sharing the idea.

[tatertot]

More suggestions:

Don't forget to advertise out of the area. People are leaving the west coast in droves because there is no work. So you advertise "Open your own health food store for $xxx in beautiful downtown Piqua Ohio. Labor costs are low, rent is low. Same ad with ice cream shop, deli, auto parts store, book store. You just have a list of what they need and what it costs. Craigslist ads are free.

5,000 square ft is too big for an apartment. I'd try to talk the family into splitting it into 4 units and then you go after accountants and lawyers, and escrow companies that have found their income cut and offer them a floor for a decent rent that includes an owners/ managers apartment in the rent. (just be careful of getting a sweat shop that will stack 40 undocumented aliens in one of those aprtments.)

[furnishedowner]

What are your monthly carrying costs?

Is the space set up so that it could be rented out as individual living units?  Rather than commercial space?  Could you get enough rent to pay utilities and weather this downturn?  Could you move in yourself?

Is there any demand for furnished apartments?  Whole suites of furniture can easily be rented.

Judo or Karate studio?  Dance studio?  Temporary US Census Bureau offices?  They are leasing space nation-wide right now.  The office that I worked out of 10 years ago had all folding cardboard desks and furniture.  They will be real concerned with getting a budget place.  They will like a bottom floor as they are always shlepping stuff in and out.

Good luck and let us know how it goes.

Furnishedowner

[MERRR]

hey guys/gals- thanks for all of your responses.  Yesterday out of the blue we got a call from a guy who looked at the property almost 2 years ago before it was renovated.  He is an antique dealer and signed a lease for the first floor.  We are gettin $1500 a month from him, which is enough to cover all carrying costs for the entire building.  Again, thanks so much for all of your advice.


Thanks again,
Matt

[furnishedowner]

Matt,

Terrific.  We could all do with some good news.  You did well to hang in there.

Furnishedowner

[moellerryan]

Some very good and creative ideas posted here.  My suggestions are to market like crazy for any and every idea.  I also recommend talking to every property management company and property manager you can.  They may be able to get the property rented and take all the hassles off your hands.  Finally you will have to be patient.  That property in 5 or 10 years will probably be making a fortune, the economy is just a little brutal right now.  I am from OH and know how the market is, especially in small cities like Piqua.  Best of luck, your patience, creativity and persistence will pay off.

[fdjake]

Glad to hear you have a new tenant!!!

But here's another idea should that fall through....

Your answer may lie in the bad economy itself!!!!!!

How about renting that building to a SCHOOL the teaches out of work people NEW SKILLS???

That segment of the economy is BOOMING right now....Talk to some area adult ed. businesses and offer them your building at a reduced rent.....

Additionally INCUBATERS for start up businesses could rent the remaining space....Down stairs people LEARN how to start new careers....UP STAIRS they work with people STARTING new BUSINESSES!!!!  They get FREE labor, the school gets enrollment, the PEOPLE get training in a new occupation.

DEALS GET DONE WHEN EACH SIDES LEAVES THE TABLE WITH SOMETHING THEY 
P E R C E I V E AS VALUABLE!!!